5 February 2026

 

Europe’s deep-tech problem does not begin with invention.

It emerges later, when a company has validated its technology and must confront the realities of industrial scale: qualifying a new material for safety-critical use, building manufacturing capacity where none existed before, navigating certification regimes, and financing years of deployment before revenues resemble venture-scale growth. This is the phase where European deep-tech and climate-tech companies most often slow down, sell early, or look abroad for capital.

That is the context in which Kembara Fund I’s €750 million first close, announced in early February and led by Mundi Ventures, should be read. The fund is positioned as a growth-stage vehicle focused on Series B and C investments in European deep tech and climate tech, explicitly targeting the point in the funding lifecycle where Europe has repeatedly struggled to provide continuity.

Reported by The Next Web and TechCrunch, the first close makes Kembara one of the largest dedicated deep-tech growth funds ever raised in Europe, with a reported target size of around €1 billion. More importantly, it reflects a growing recognition among investors that Europe’s innovation challenge is no longer about generating startups — it is about scaling them.

A recurring problem Europe has already diagnosed

The scale-up gap is not a new discovery. European policymakers, founders and investors have been discussing it for years, often in abstract terms. Early-stage funding has expanded significantly, supported by national innovation agencies, EU programmes and an increasingly mature venture ecosystem. Yet once companies move beyond proof-of-concept, capital availability drops sharply.

As MoveTheNeedle.news reported previously, the European Commission has begun to acknowledge this mismatch through initiatives such as the European Innovation Council’s STEP Scale Up programme, which aims to support later-stage companies developing strategic technologies. That reporting raised a key question: whether €10–30 million public cheques are sufficient when deep-tech scaling frequently requires far larger, longer-term commitments.

Kembara enters precisely where those public instruments reach their limits.

Growth capital that reflects industrial reality

What distinguishes Kembara is not simply its size, but the stage it targets. Series B and C rounds in deep tech are structurally different from growth rounds in software. Capital at this stage is not primarily used to accelerate customer acquisition or expand teams; it is deployed to underwrite manufacturing learning curves, first commercial deployments, regulatory approval processes and complex procurement cycles.

These characteristics have historically deterred traditional venture capital, which favours faster scaling and clearer exit timelines. The result has been a persistent financing discontinuity: European companies survive early experimentation but struggle to fund industrial execution.

Kembara’s structure suggests a deliberate attempt to address that mismatch rather than work around it.

Climate tech without the shortcuts

Climate tech sits at the centre of the fund’s thesis, but not in its more fashionable interpretations. Kembara’s focus is on technologies embedded in energy systems, industrial processes and physical infrastructure — the sectors responsible for the majority of emissions and the most difficult to decarbonise.

This aligns with a broader shift in climate investing, away from consumer-facing sustainability products and toward capital-intensive infrastructure innovation. These are precisely the domains where Europe has industrial depth, regulatory influence and long-term policy commitments — and where undercapitalisation has been most damaging.

Public capital as an early signal

Kembara’s credibility as a growth-stage instrument is reinforced by its earlier backing. In July 2024, the European Investment Fund committed €350 million to the fund under the European Tech Champions Initiative, explicitly framing the investment as a response to Europe’s shortage of late-stage capital for deep tech and climate companies.

That cornerstone investment helps explain how Kembara could reach a €750 million first close in a market that remains cautious about venture risk. It also places the fund within a broader European effort to retain strategic technologies beyond the early innovation phase.

A disciplined moment for venture capital

The timing of the raise matters. Kembara is launching in a venture environment shaped by valuation resets, slower deal flow and heightened scrutiny from limited partners. Growth capital in 2026 is more selective and more conditional than it was during the peak years of 2021 and 2022.

That environment arguably favours deep tech. When capital is no longer abundant, technologies addressing structural needs — energy security, industrial automation, infrastructure resilience — regain relative appeal. Kembara’s first close reflects that recalibration rather than a return to speculative exuberance.

What this changes — and what it doesn’t

For European founders, the emergence of a fund like Kembara is a meaningful signal, but not a promise. It suggests that later-stage capital is becoming more available within Europe, reducing the pressure to rely on non-European lead investors at the most consequential stages of growth.

At the same time, larger funds bring higher expectations. Governance, execution discipline and credible commercial pathways matter more, not less. Deep-tech founders will still need to prove they can translate scientific advantage into industrial relevance.

One fund, one test

Even at €750 million, Kembara will not solve Europe’s scale-up gap on its own. The problem is systemic, shaped by fragmented capital markets, regulatory complexity and conservative institutional behaviour. But funds like Kembara change the terms of the debate.

As MoveTheNeedle.news previously reported when analysing daphni’s €260 million Blue fund, Europe has no shortage of intent when it comes to backing science-driven startups. What has been missing is capital deployed at a scale that matches industrial ambition. 

Kembara’s first close is an acknowledgment that the scale-up gap exists at scale. Whether the fund succeeds will depend on execution — on whether it can consistently lead the rounds that keep Europe’s most advanced technologies building, deploying and growing at home.

But the significance of the moment is already clear. Europe has spent years diagnosing its deep-tech problem. With Kembara, it is finally testing whether it is willing to finance a solution on terms that reflect industrial reality rather than venture convention.

 

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